Gyeongnam Police Agency Conducts Search and Seizure at Hapcheon County Office Over 25 Billion Won Hotel Project Embezzlement Case

The Gyeongnam Provincial Police Agency conducted a search and seizure at Hapcheon County Office on the 27th in connection with the breach of trust and embezzlement case involving the operator of the Hapcheon Video Theme Park hotel construction project.

The Anti-Corruption and Economic Crime Investigation Division 1 of the Metropolitan Investigation Unit of the Provincial Police Agency announced that from 9:30 a.m. to 4 p.m. on the same day, search warrants were executed at 11 locations, including the Tourism Promotion Division of Hapcheon County Office, the office of the operator’s representative Mr. A in Yangsan, and an accomplice’s office in Seoul.

The Hapcheon Video Theme Park hotel construction project involves building a hotel with 200 rooms and a total area of 7,336㎡ on a 1,607㎡ site within the Video Theme Park in Yongju-myeon.

The county and the operator signed an implementation agreement worth 59 billion KRW, under which the county provided the land free of charge, the operator would build the hotel and donate it to the county, and the operator would hold the hotel operation rights for 20 years.

Hapcheon County Office, Gyeongnam.
[Photo by Hapcheon County Office]

The construction was carried out with the operator investing 4 billion KRW and borrowing the remaining 55 billion KRW through real estate project financing (PF).

In March of this year, when the operator requested an increase of 15 billion KRW in the project cost citing a sharp rise in material costs due to inflation, the county reviewed the validity of the increase and discovered excessive project expenditures.

To verify this, the county contacted the operator’s representative Mr. A, but has been unable to reach him since April 19.

It is known that Mr. A absconded with about 25 billion KRW out of the 55 billion KRW borrowed for the project.

The county filed a complaint with the police against Mr. A and five other operator-related persons on charges of breach of trust, embezzlement, and violations of the Electronic Financial Transactions Act, and declared abandonment of the project on the 20th.